<p>The Karnataka budget presented by Chief Minister B S Yediyurappa bears the full imprint of Covid-19 on the state’s economy. Contrary to claims in some quarters that the economy has bounced back, an analysis of the budget proposals indicates that there could at best be some green shoots. A complete recovery is still far away. For the first time in about a decade, the state will be saddled with a revenue deficit of Rs 15,134 crore.</p>.<p>Minor Irrigation Minister J C Madhuswamy’s honest admission that it would take at least three to four years to bridge the revenue gap only shows how bad the situation is. Again, the fiscal deficit, projected at Rs 59,240 crore, or 3.48% of the Gross State Domestic Product (GSDP) is higher than the 3% ceiling mandated by the Karnataka Fiscal Responsibility Act, 2002. Similarly, the total liabilities, estimated at Rs 4,57,899 crore, account for 26.9% of the GSDP, while the state had in the past kept this below the stipulated 25%.</p>.<p>Given the precarious financial position, Yediyurappa has done a balancing act by presenting a please-all budget, and it goes to the Chief Minister’s credit that he did not fall to the temptation of announcing any new big-ticket projects. While post-GST introduction, the state is left with few avenues to mobilise taxes, the common man has been spared any additional burden. The proposal to reduce stamp duty from 5% to 3% for first time registration of apartments valued between Rs 35 lakh and Rs 45 lakh is expected to spur real estate and promote affordable housing.</p>.<p>While tipplers usually bear the brunt in every budget, Yediyurappa has left the excise duty on liquor untouched while increasing the revenue target from Rs 22,700 crore to Rs 24,580 crore. This is sensible. A rise in liquor prices tends to drive people to buy and consume spurious alcohol, causing loss of revenue and even lives. The allocation of Rs 50 crore for improving toilets in government schools, which are in a despicable state now, is also welcome.</p>.<p>Bengalureans have some reason to cheer, with the budget allotting Rs 7,795 crore without taking on any new grand projects that would neither solve the city’s problems nor would be welcome in terms of environmental sustainability. Instead, there is a welcome allocation of Rs 850 crore for the one project that could actually help improve mobility: the much-delayed suburban rail system. The task before the Chief Minister now is to ensure strict discipline in the implementation of the budget. The state cannot afford leakage and wastage of funds.</p>
<p>The Karnataka budget presented by Chief Minister B S Yediyurappa bears the full imprint of Covid-19 on the state’s economy. Contrary to claims in some quarters that the economy has bounced back, an analysis of the budget proposals indicates that there could at best be some green shoots. A complete recovery is still far away. For the first time in about a decade, the state will be saddled with a revenue deficit of Rs 15,134 crore.</p>.<p>Minor Irrigation Minister J C Madhuswamy’s honest admission that it would take at least three to four years to bridge the revenue gap only shows how bad the situation is. Again, the fiscal deficit, projected at Rs 59,240 crore, or 3.48% of the Gross State Domestic Product (GSDP) is higher than the 3% ceiling mandated by the Karnataka Fiscal Responsibility Act, 2002. Similarly, the total liabilities, estimated at Rs 4,57,899 crore, account for 26.9% of the GSDP, while the state had in the past kept this below the stipulated 25%.</p>.<p>Given the precarious financial position, Yediyurappa has done a balancing act by presenting a please-all budget, and it goes to the Chief Minister’s credit that he did not fall to the temptation of announcing any new big-ticket projects. While post-GST introduction, the state is left with few avenues to mobilise taxes, the common man has been spared any additional burden. The proposal to reduce stamp duty from 5% to 3% for first time registration of apartments valued between Rs 35 lakh and Rs 45 lakh is expected to spur real estate and promote affordable housing.</p>.<p>While tipplers usually bear the brunt in every budget, Yediyurappa has left the excise duty on liquor untouched while increasing the revenue target from Rs 22,700 crore to Rs 24,580 crore. This is sensible. A rise in liquor prices tends to drive people to buy and consume spurious alcohol, causing loss of revenue and even lives. The allocation of Rs 50 crore for improving toilets in government schools, which are in a despicable state now, is also welcome.</p>.<p>Bengalureans have some reason to cheer, with the budget allotting Rs 7,795 crore without taking on any new grand projects that would neither solve the city’s problems nor would be welcome in terms of environmental sustainability. Instead, there is a welcome allocation of Rs 850 crore for the one project that could actually help improve mobility: the much-delayed suburban rail system. The task before the Chief Minister now is to ensure strict discipline in the implementation of the budget. The state cannot afford leakage and wastage of funds.</p>